Banks Face Scrutiny as Regulators Crack Down on Compliance

South Africa’s financial regulators are stepping up efforts to monitor banks’ compliance with consumer protection rules, ensuring greater transparency and accountability.

Investigation into Major Banks

The National Competition Commission has launched an investigation into several major banks, alleging that they colluded to fix bid-offer spreads and allocate customers in the foreign exchange market. This probe is part of a broader effort by regulators to strengthen oversight of the financial sector.

New Processes and Procedures

In recent years, banks have faced increasing scrutiny over their internal processes and procedures. Regulators are now demanding more transparency around how banks handle customer complaints and resolve disputes. Banks may also face restrictions on their powers and actions if they fail to comply with regulatory requirements.

• The Prudential Authority has introduced new reporting requirements for directors and external auditors.
• Banks must provide annual reports on their internal controls, including information on whether they have implemented policies and procedures to ensure high ethical standards among employees.

Enforcement Efforts

Regulators are stepping up enforcement efforts to hold banks accountable for non-compliance. The Prudential Authority has the power to:

• Cancel or suspend a bank’s registration if it fails to comply with regulatory requirements.
• Institute court proceedings to enforce its decisions.

Additionally, regulators are working together to share information and coordinate supervisory activities across borders, including sharing intelligence on suspicious transactions and cooperating with international authorities to combat financial crime.

Future Changes

The financial sector is expected to undergo significant changes in the coming years. The FSR Act will come into force by April 2019, introducing new provisions regulating “significant owners” and “financial conglomerates.” Regulators are also working to strengthen consumer protection rules, with a focus on improving customer treatment and resolving disputes.

As regulators continue to crack down on non-compliance, banks must adapt to the changing regulatory landscape. Failure to do so could result in restrictions on their powers and actions, as well as potential fines and penalties for non-compliance.